CHARLESTON – The state Supreme Court has reversed a 2022 ruling by a Fayette Circuit Court judge who had set aside a jury verdict in a fracking pipeline case.
In a March 21 opinion, the Justices also remanded the case back to Fayette County with directions to reinstate the verdict in favor of the petitioners and to enter the judgment.
“Given the significant and exclusive functions of a jury to weigh evidence and resolve factual questions, we have determined that a new trial should rarely be granted and then granted only where it is reasonably clear that prejudicial error has crept into the record or that substantial justice has not been done,” Justice Haley Bunn wrote in the newest ruling. “With these principles in mind, we evaluate the circuit court’s decision to grant a new trial to North Hills, the party with the burden of proof in this case, despite the jury’s unanimous verdict in favor of the defendant, Webb Construction, and with no allegation of prejudicial trial error. …
Bunn
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“We find that the circuit court abused its discretion in setting aside the jury’s verdict and granting the plaintiff a new trial.”
Danny Webb and Danny Webb Construction Company had appealed the September 16, 2022, ruling by Judge Paul M. Blake Jr., who also had ordered a new trial for respondent North Hills Group Inc.
Webb said Blake erred because sufficient evidence supported the verdict and because the parties’ written lease agreement precludes North Hills’ claim for unjust enrichment.
In 2001, North Hills conveyed a 4.76-acre parcel of land in Fayette County to Webb Construction, including all right, title and interest to and in an unplugged and unproductive gas well located on the Webb parcel known as Well 460.
Webb obtained an underground injection control permit from the West Virginia Department of Environmental Protection, converted the well into an UIC well and used it to store and dispose of wastewater generated from off-site oil and gas hydraulic fracturing operations. Webb also placed aboveground storage tanks on the parcel.
North Hills owns a tract of approximately 3,624 acres adjacent to the Webb parcel. Another gas well, known as Well 508, is located on the North Hills tract. In 2008, North Hills and Webb Construction executed an oil and gas lease that granted Webb Construction the right to conduct certain oil and gas related operations on the North Hills tract. Webb made an initial payment of $72,480 for the lease, which included a provision granting Webb Construction “the right to inject salt water or brine in any ... wells drilled or located upon the leased premises which prove unproductive” in exchange for an annual payment of $3,624.
Webb considered Well 508 to be unproductive, obtained a UIC permit from DEP, and converted it into a UIC well for storing and disposing of fracking waste.
At some point after executing the lease, Webb installed pipelines running from its operations on the Webb parcel to Well 508, which it used to pump fluids from its storage tanks on the Webb parcel to Well 508 for injection into the well. Beginning in 2012, Webb paid North Hills the $3,624 annual fee for the privilege of injecting Well 508. Webb submitted its final payment in 2015.
In April 2015, Patricia Hamilton, the heir of an original founder of North Hills, learned Webb was operating Well 508 as an underground injection control well. As the new president of the board of directors, Hamilton and the rest of the board voted to terminate Webb’s lease. North Hills notified Webb of the lease’s termination by letter dated July 24, 2015.
The letter also said Webb failed to pursue oil and gas development in accordance with the lease’s purpose and that North Hills had “credible information” that Webb violated the lease by injecting Well 508 with fluids of a nature “clearly not contemplated” in the lease, which allowed Webb to inject only salt water, brine or natural gas.
Webb did not cease its operations, and, North Hills petitioned Fayette Circuit Court for declaratory and injunctive relief while asking the court to declare the oil and gas lease terminated and grant an injunction requiring Webb petitioners to cease and desist any further activities on the North Hills tract.
Following two days of hearings, the circuit court concluded that Webb petitioners breached the oil and gas lease by commencing underground injection activities in Well 508 without first exploring the well for oil and gas and by injecting Well 508 with substances not authorized by the lease. Webb appealed that decision to the state Supreme Court as well. The court affirmed the circuit court’s order in part, on different grounds, and reversed in part.
“Instead of adopting the circuit court’s finding that North Hills terminated the lease, we relied on specific provisions in the lease to affirm, concluding that the ‘Oil and Gas Lease terminated of its own accord at the conclusion of the secondary term of the lease,’” Bunn wrote in this month’s ruling. “We also affirmed the circuit court’s decision to grant the injunction. However, we reversed the circuit court, in part, because there was insufficient evidence in the record to pierce the corporate veil.”
Later, Charles Flint, who had served as vice president and then treasurer of North Hills, visited the North Hills tract for the first time after Webb left it and purportedly found numerous leaks in the pipeline.
North Hills filed its second suit in 2019 accusing Webb of negligence, trespass, nuisance, unjust enrichment and breach of fiduciary duty. It said Webb’s injection of fracking waste into Well 508 and the pipeline it constructed to pump the fluid from the Webb parcel to Well 508 contaminated the North Hills tract.
The jury returned its verdict in favor of Webb on all five of North Hills’ claims. North Hills filed motions to set aside the verdict and for a new trial. On September 16, 2022, Blake granted North Hills’ motions and ordered a new trial. Webb appealed, arguing Blake abused his discretion by granting North Hills’ motions.
Blake said the jury’s verdict could not stand because the Supreme Court’s decision in the earlier Webb matter was determinative of North Hills’ tort claims, and Webb did not contradict or rebut the evidence or testimony presented by North Hills.
Webb argued that Blake abused his discretion by granting North Hills a new trial because “sufficient evidence supported the jury’s defense verdict finding that North Hills did not bear its burden to prove that Webb Construction committed the alleged torts” and “North Hills failed to establish that it suffered injury to the North Hills tract from contamination emanating from the Well 508 injection site or the abandoned pipeline that formerly connected Well 508 to the Webb parcel.”
North Hills, however, claimed its evidence was neither contradicted nor rebutted by Webb and that Webb injected “unknown” amounts of substances “from unknown sources into the 508 Well” without keeping records on the identity or sources of the substances.
In his decision to grant a new trial, Blake said the Supreme Court findings “establish the elements for each of plaintiff’s claims against the defendants.”
Bunn and the rest of the court disagree.
“To the contrary, Webb-I does not even discuss, much less resolve, any issue pertaining to whether Webb petitioners committed any tort by allegedly contaminating the North Hills tract,” she wrote. “Rather, the Webb-I Court considered the circuit court’s entry of a declaratory judgment and issuance of a stay.
“In Webb-I, North Hills sought no monetary damages and claimed no injury resulting from the breach of contract. Absent other evidence supporting North Hills’ tort claims, which we discuss below, the lower court’s misapprehension of both tort law and the impact of our decision in Webb-I warrants reversal. …
“As the plaintiff in the underlying action, North Hills had the burden to prove its claims. … North Hills had to prove that it suffered an injury. As the plaintiff in this action, it was incumbent on North Hills to prove its case. …
“North Hills’ failure to convince the jury that it met its burden of proof simply does not entitle it to a new trial.”
Bunn said the Supreme Court generally affords deference to a trial court in deciding whether to grant a motion for a new trial.
“However, a new trial should rarely be granted and then granted only where it is reasonably clear that prejudicial error has crept into the record or that substantial justice has not been done,” she wrote. “In this appeal, there is no allegation of prejudicial trial error, such as improper argument by counsel, the exclusion of admissible evidence, the improper admission of evidence, or incorrect jury instructions, that warranted granting North Hills a second chance to prove its case.
“Additionally, both the circuit court and North Hills have failed to explain how the verdict is against the clear weight of the evidence, is based on false evidence or will result in a miscarriage of justice. …
“Thus, because this case was fairly tried, the circuit court should have accepted the jury’s verdict and denied North Hills’ motion for a new trial as to its tort claims. We find the circuit court abused its discretion by vacating the jury’s defense verdict as against the weight of the evidence and granting North Hills a new trial on its tort claims despite North Hills’ failure to prove that it suffered any injury resulting from Webb’s actions. …
“We must protect the jury’s vital constitutional role in our legal system and reverse the circuit court’s decision. When we find that the lower court has abused its discretion, we will not hesitate to right the wrong that has been committed.”
J. Zak Ritchie, Michael B. Hissam and Andrew C. Robey of Hissam Forman Donovan Ritchie in Charleston represented Webb. North Hills was represented by Kevin W. Thompson and David R. Barney Jr. of Thompson Barney in Charleston. Chief Justice Bill Wooton disqualified himself, and Circuit Court Judge Michael D. Lorensen sat by temporary assignment.
West Virginia Supreme Court of Appeals case number 22-789